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The bank posted a 3.5 per cent earnings increase for 2019. Adjusted per-share earnings for the fourth quarter were $2.22, five cents short of analysts’ expectations. However, the bank announced it had made connections with 3.2 million Canadians via apps developed under its RBC Ventures initiative. (The Logic)

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Talking point: RBC is hoping to turn app users into bank customers via an aggressive push in 2020. In June 2018, the bank announced a plan to get 500,000 new customers in five years via its ventures subsidiary. So far, it’s made about 50,000 conversions without much marketing spend behind the 17 ventures it’s launched. Fourteen more are under development. Capital markets profit dropped 12 per cent and investment banking fees are down 17 per cent. The bank also spent $113 million on severance-related costs in the quarter as it made cuts in Europe and Australia. RBC is not the only Canadian bank cutting staff: on Tuesday, BMO reported a $484-million restructuring charge, mostly for severance payments.

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The Ottawa-based artificial intelligence startup will monitor transactions and block suspicious ones as part of a proof-of-concept exercise. The bank will publish a report after the pilot is completed. (The Logic)

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Talking point: The move comes one week after The Logic reported the bank is exploring launching a digital currency to collect more data on transactions than is possible with cash. The MindBridge pilot allows it to gather more information on existing digital payments. It’s also the bank’s latest move to prepare for a digital coin following the first-ever transfer of a digital currency from one central bank to another, which it conducted with Singapore in May. For MindBridge, this is the latest sign of the federal government’s favour. In June, the company raised $14.5 million from the Strategic Innovation Fund. In August, the company hired Alex Benay, formerly the federal government’s chief information officer.

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The bank pointed to encouraging growth in the second quarter as a reason for keeping the rate, but said it expects economic activity to slow down in the second half of the year, citing the U.S.-China trade conflict and its negative effect on global trade and business investment. The rate will be updated again on October 30. (The Logic)

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Talking point: The decision comes as banks around the world, including the U.S. Federal Reserve, are cutting their interest rates as a response to slowing global growth. Holding interest rates steady is a sign that the bank believes Canada can withstand that pressure for the time being. Canada’s GDP growth increased to 3.7 per cent last quarter, which is the highest rate since the same period in 2017, but most of that growth was tied to exports, an area that’s especially vulnerable to the China-U.S. trade war, Brexit and worrying signals of a global economic recession. If the bank lowers borrowing rates in an effort to insulate Canada from those pressures, it risks elevating levels of private debt, which remain high after reaching record levels in 2018. Most of Canada’s exports are tied to the United States, where domestic spending remains strong. That could help cushion the country’s economy from the effects of decelerating global trade, although there are some signs that exports are already dropping. New data from Statistics Canada released Wednesday showed a 0.9 per cent decrease in exports in July.

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Snobar, executive director of Ryerson University’s DMZ, and Bennett, former Newfoundland finance minister, are joining BDC’s 13-person board. Suzanne Trottier, capacity director with the First Nations Financial Management Board (FMB), is also joining. (The Logic)

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Talking point: Each of the three new directors have experience in areas the bank is increasingly focusing on. Bennett is a board member of SheEO, an accelerator and network promoting funding in women-led companies; in July, BDC CEO Michael Denham said his bank’s $200-million fund for women entrepreneurs is a priority. Snobar runs one of Canada’s largest accelerators, which has a founder-first mandate and spends a lot of time trying to remove pain points for accelerators. BDC is investing in technology that helps entrepreneurs get loans approved quicker; in some cases, $750,000 loans can be approved in 30 minutes. The bank is also stepping up efforts for Indigenous entrepreneurs. It currently has $350 million committed to clients in its Indigenous banking section, but is looking to significantly increase that with a new $100-million Indigenous Growth Fund. Trottier’s experience may come in handy during the expansion. Her team at FMB works with more than 200 First Nations governments on financial management.

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The bank raised its second-quarter growth estimate for Canada to 2.3 per cent, up from 1.3 per cent, citing some “temporary” factors, such as a surge in oil production. It cut its global growth forecast for 2019 to 3.0 per cent, down from 3.2 per cent due to escalating global trade conflicts. (The Logic)

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Talking point: The bank’s confidence in the domestic economy, at least in the short term, follows a string of positive economic indicators in recent months. Canada added 27,700 jobs in May and a record 106,500 jobs in April. Its unemployment rate fell in May to its lowest level since 1976. Aiding the positive outlook—along with what the bank calls a healthy labour market—is the bank’s view that Canada’s housing market is cooling off, as well as the loonie being the top performing G10 currency this year. But, while the recent job growth mostly came from full-time positions, much of it was from an increase in self-employment, which can be more precarious for workers and the economy. And, the bank said that trade tensions between the U.S. and China in particular are negatively impacting manufacturing as well as investment, and is pushing down commodity prices globally. Those impacts continue to cloud the Bank of Canada’s overall outlook, spurring it to remain cautious in its view for Canada’s economy.

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The fund will focus on legacy Canadian industries like agriculture, resource extraction and manufacturing. The 10-person team will be led by Joseph Regan, a managing partner at the BDC who previously made cleantech venture capital investments for Export Development Canada. (Globe and Mail)

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Talking point: The Crown corporation has been shifting away from its primary investment focus on information technology, looking for other industries with private-sector funding gaps. In March, Jérôme Nycz, executive vice-president of BDC Capital, told my colleague Jessica that the BDC planned to help digitize established industries like agri-food, agricultural technology and ocean technology. “We’ll move first as a direct investor, and then we’ll make sure that we’re not the only investors,” he said. That’s a similar model to the BDC’s software and biotech funds. The bank recently spun out Framework Venture Partners and Amplitude Ventures as private-sector firms that will manage some of its investments in those two sectors. The Logic’s editor, David Skok, wrote in May that the Industrial Innovation fund would be coming, saying it would have a direct positive impact on Western Canada.

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The risks include insuring against damages to infrastructure caused by extreme-weather events, and the cost of shifting to a low-carbon economy. This is the first time the central bank has included climate change among its list of vulnerabilities to the financial system in its annual financial health report card. Alongside household debt and the housing market, cyber attacks were named as a significant threat. (Canadian Press)

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Talking point: This isn’t the first time the central bank has raised concerns around climate risk. In March, it joined a network of central banks that study climate change’s impact on financial systems and develop risk-management policies to deal with it. The federal government is starting to consider the issue, too. The 2019 federal budget included recommendations that companies disclose their carbon footprints and, later this spring, Ottawa’s Expert Panel on Sustainable Finance is expected to deliver its final report to the finance and environment ministers.

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The central bank held its interest rate at 1.75 per cent on Wednesday, saying the economy needs to maintain a low rate. It cited a sluggish global economy and weak domestic business activity linked to trade tensions between China and the U.S. and low investment in the oil sector as reasons for holding the rate. The bank said Canada’s economy will grow 1.2 per cent this year, down from an estimated 1.7 per cent three months ago. It expects the economy to grow by 2 per cent next year. The Canadian dollar dropped half a cent on the news to 74 cents on the U.S. dollar. (Globe and Mail)

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Talking point: The news should reduce some pressure on home-owners who were anticipating a hike on their variable rate mortgages. It also signals to homebuyers that fixed rate mortgages should stay the same at least until the central bank revists rates in six weeks, and potentially much longer. Economists, including Krishen Rangasamy and Paul-Andre Pinsonnault of the Bank of Canada, are now anticipating rate cuts if the economy doesn’t improve in the latter half of the year. The cuts could help stimulate Canada’s economy—by keeping mortgages and savings accounts rates low, and thus encouraging spending—in the face of a long-predicted slump.

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David Rozon, associate vice-president of technology banking for Ontario, is going to Scotiabank. Brent Layton, a managing director whose remit includes technology and sustainability banking, will join CIBC. (Globe and Mail)

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Talking point: National Bank’s technology division has lost a number of top employees in recent months as rivals are showing a greater interest in the tech sector. National Bank is still a key player when it comes to tech financing: the company co-led an equity raise by Shopify in 2019 and was a lead underwriter for Lightspeed’s IPO earlier this year. Competition in the space is heating up with BMO and CIBC in particular looking to sign more deals with tech companies. In August 2018, CIBC poached Eric Laflamme from National Bank to lead the Quebec region of its innovation banking division. The banks’ increasing interest in startup financing is bringing them head to head with Silicon Valley Bank, which got a license to operate in Canada in March. Earlier this month, CIBC got a US$55-million credit facility for Lightspeed, taking over a US$15-million credit facility that Silicon Valley Bank had been providing.